Correlation Between Oak Valley and Wake Forest
Can any of the company-specific risk be diversified away by investing in both Oak Valley and Wake Forest at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Oak Valley and Wake Forest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oak Valley Bancorp and Wake Forest Bancshares, you can compare the effects of market volatilities on Oak Valley and Wake Forest and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Oak Valley with a short position of Wake Forest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Valley and Wake Forest.
Diversification Opportunities for Oak Valley and Wake Forest
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oak and Wake is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Oak Valley Bancorp and Wake Forest Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wake Forest Bancshares and Oak Valley is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Oak Valley Bancorp are associated (or correlated) with Wake Forest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wake Forest Bancshares has no effect on the direction of Oak Valley i.e., Oak Valley and Wake Forest go up and down completely randomly.
Pair Corralation between Oak Valley and Wake Forest
If you would invest 2,555 in Oak Valley Bancorp on September 3, 2024 and sell it today you would earn a total of 587.00 from holding Oak Valley Bancorp or generate 22.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.32% |
| Values | Daily Returns |
Oak Valley Bancorp vs. Wake Forest Bancshares
Performance |
| Timeline |
| Oak Valley Bancorp |
| Wake Forest Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Oak Valley and Wake Forest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oak Valley and Wake Forest
The main advantage of trading using opposite Oak Valley and Wake Forest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Valley position performs unexpectedly, Wake Forest can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wake Forest will offset losses from the drop in Wake Forest's long position.| Oak Valley vs. Home Federal Bancorp | Oak Valley vs. Lake Shore Bancorp | Oak Valley vs. Community West Bancshares | Oak Valley vs. Magyar Bancorp |
| Wake Forest vs. Home Federal Bancorp | Wake Forest vs. First Capital | Wake Forest vs. Magyar Bancorp | Wake Forest vs. Oak Valley Bancorp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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